After Greece defaulted on a payment to the International Monetary Fund on Wednesday, Prime Minister Alexis Tsipras signaled that he may accept bailout terms outlined by the country's creditors. It's not the first time that Greece has defaulted on its sovereign debts: In 2012, it did so twice. This time, the repercussions could be much worse as international creditors are unlikely to save the country from being forced to leave the euro zone and return to the Greek drachma.
Nobody really knows the consequences of a "Grexit," but since 1998, at least 16 sovereign bond issuers have defaulted, according to ratings agency Moody's. Apart from Greece, there are four other countries that have defaulted twice in the last 17 years: Ecuador, Jamaica, Belize and Argentina.
The Moody's list only takes into account recently defaulted sovereign bond issuers. Sudan, Somalia and Zimbabwe have been in default to the IMF for several years or decades, as well, and continue to do so. Sudan started defaulting to the IMF in 1984, according to an extensive database collected by the Bank of Canada, which is why it is not included on the map above that focuses on defaults that started after 1998.
Can Greece learn from previous defaults?
A closer look at recent and more historical incidents of states being unable to fulfill their financial obligations reveals that the Greek case is indeed unique.
Argentina is most frequently brought up in discussions on the potential effects of a Greek default. Asked about the lessons for Greece, Domingo Cavallo, who was Argentina's economics minister when that nation defaulted in 2001, told the BBC: "Defaulting not only on the foreign debts but also on the domestic debts and all foreign contracts at the beginning of 2002 was really a tragedy for Argentina."
The default's repercussions were devastating: More than half of all Argentines lived in poverty in 2003. Inflation and unemployment rose sharply. Despite the dramatic consequences for Argentines, the default appears to have had a limited impact on other economies. "Argentina’s sovereign default in 2001 was then the largest ever, and yet even it did not provoke contagion in global markets," the Financial Times concluded last year when Argentina faced yet another default.
But Argentina was not part of a currency union such as the euro zone. Furthermore, Greece is geopolitically significant, given its NATO membership and its proximity to the Middle East.
Somewhat less momentous was Russia's experience in the late 1990s. When oil prices dropped in 1997, Russian exports plummeted and caused a budgetary crisis. Despite an IMF loan, Russia later defaulted on its domestic as well as foreign obligations. It took until 2000 to restructure the Russian debts.
The situation became so dire that Russia had to demand humanitarian aid. Rising oil prices helped the country overcome its crisis soon afterward. Greece, however, only has limited access to valuable natural resources, and its manufacturing sector is weak. Tourism, one of the country's few reliable revenue streams, would likely suffer from a euro zone exit.
Other countries that have recently defaulted on sovereign debt include Pakistan, Ukraine, Ivory Coast, Moldova, Uruguay, Nicaragua, Grenada, the Dominican Republic, the Seychelles and Cyprus.
That sounds like a lot of defaults, but according to research by the Bank of Canada, the share of total sovereign debt in default out of world public debt or world GDP has sunk since reaching a peak in the 1980s.
Since 1800, Germany has defaulted four times
What appears striking is that some of the countries that have been particularly tough on Greek debts have faced the same fate over the last two centuries. Spain, for instance, has defaulted six times.
And Germany -- Europe's leading economy, which has been especially been keen on enforcing austerity in countries such as Greece, Spain and Portugal -- has defaulted four times over the last two centuries. Perhaps their experience proves countries can come back from a default, given time.